UN approves plans for historic global tax reform

After months of debate and pushback from wealthy nations, countries at the United Nations adopted a resolution yesterday to begin the process of establishing a global tax framework that would cause wealthy individuals to pay more taxes.

The resolution was adopted by a landslide majority.

The framework convention can eventually move decision-making on global tax rules from the Organisation for Economic Co-operation and Development (OECD) – a small club of rich countries which have set tax laws in their favour for decades.

“This is a historic victory delivered by countries of the global south for the benefit of people around the globe everywhere. Tax havens and corporate lobbyists have had too much influence on global tax policy at the OECD for too long. Today, we start to take back power over global tax rules that affect all of us,” said Alex Cobham, chief executive at the Tax Justice Network (TJN).

For decades, the result of yesterday’s UN vote had been considered impossible to achieve. The last attempt to bring decision-making on tax rules to the UN was in the 1970’s. The failure of the attempt dissuaded any similar attempts for nearly 50 years.

The success of the resolution, despite the resistance from the world’s strongest economies, is a rare feat, and demonstrates the overwhelming demand from countries outside the OECD for the meaningful voice on global tax rules, which they have historically been denied.

The unamended resolution was supported by a big margin. Nearly two-thirds (125) of countries at the UN voted in favour of the reforms. Forty-eight countries voted against the resolution and nine abstained. The US, UK and all EU member countries voted against the resolution.

The adoption of the resolution is being widely celebrated by government officials, economists and civil society organisations around the world.

With this newly adopted resolution, countries like the BVI, that have strong financial services industries could be affected. However, the full implications for financial services industries around the world are not yet known.